Is LegalZoom the future of legal services? Earlier this month, the Arizona Supreme Court approved LZ Legal Services, a subsidiary of the online legal and compliance platform LegalZoom, for an Alternative Business Structure license in the state.
This means that LegalZoom will be able to provide limited legal services to individuals and small businesses, as well as create new jobs for attorneys in Arizona. LegalZoom currently relies on an independent network of lawyers in other parts of the country, according to Reuters.
“This is an exciting milestone for our company and those we will be able to serve in new ways,” Daniel Wernikoff, CEO of LegalZoom, said in a press release. “We intend to continue advancing our mission to democratize law by deeply integrating attorney expertise and support with LegalZoom’s technology, process efficiencies, and commitment to providing affordable access to legal services.”
Improving access to legal services
Over the past several years, many states have explored modifying the regulation of legal services to increase innovation and access to legal help at more affordable prices.
Access to affordable legal services continues to be a challenge, leaving many Americans choosing to handle legal problems on their own. According to the Legal Services Corporation, 86% of the civil legal problems reported by low-income Americans received inadequate or no legal help. In addition, the Self-Represented Litigant Network says an estimated 3 out of 5 people in civil cases go to court without a lawyer. In Illinois, self-represented litigants account for 41% of civil appeals filed in the state.
“For moderate-income people (between 40% and 60% of the market) who fall in the gap between those who qualify for already overstretched free legal aid resources and those who can afford firms serving the high end of the market, there is a fundamental access to justice problem that regulatory reform is necessary to fix,” wrote Bob Glaves, executive director of the Chicago Bar Foundation, last year.
“This is where we need to look at the regulatory structure for the business of law, which artificially restricts the business models lawyers can use to better serve this market and discourages collaboration with the other professionals and entities necessary to succeed in the modern world,” Glaves said.
Exploring regulatory reform
Arizona is one of several states that are considering or implementing changes to the regulation of legal services.
In August 2020, the state’s supreme court ditched a rule that barred non-lawyer ownership of law firms and approved changes that enabled the delivery of “limited legal services” by people who aren’t lawyers.
Arizona has now approved at least 12 entities for licensure, according to Reuters. Other entities recently approved will offer legal services in immigration, personal injury, and workers compensation law with the aid of technology and remote legal services in mass torts and other cases, Reuters said.
Other states like Utah, California, Florida, Washington, and North Carolina, are operating or planning “regulatory sandboxes” to foster legal innovation and test regulatory reforms while also ensuring public protection.
What’s happening in Illinois?
In Illinois, the Chicago Bar Association and the Chicago Bar Foundation launched the Task Force on the Sustainable Practice of Law & Innovation in 2019 to explore the market failure in the consumer and small business legal services market.
After a 9-month study and a public comment period, the Task Force submitted a report and 11 recommendations for regulatory reform to the Illinois Supreme Court in October 2020.
The Task Force requested that the Court defer consideration of a recommendation to further study the benefits and harm associated with Rule 5.4 on law firm ownership, based on developments in other states.
“We essentially have a live experiment in Arizona and Utah that we all can watch over the next several years and then reevaluate next steps in Illinois,” Glaves said.
Supreme Court committees have been tasked with providing further input and developing plans for the execution of most of the recommendations, which are expected later this year.
The Court deferred consideration of recommendations exploring a licensed paralegal model and modernizing lawyer advertising rules.
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